The Global South is driving economic growth, and companies also need to adjust to a newer set of political risks. Interconnected production designed for efficiency is being reconfigured for transparency and resilience. B20 takes it a step forward to bring in inclusivity. This has a direct correlation with companies getting their ESG proposition right, which improves value creation. Better ESG performance is, by itself, a risk-mitigation tool by improving corporate credit metrics. The broader benefits derive from altering exposure to extreme climatic conditions that have compelled the automobile, energy and electronics industries to shock-proof supply and production lines. Technology permits businesses to question the assumption that resilience comes at the cost of efficiency. Data-processing capabilities are changing the economics of production by speeding up response times and monitoring supply networks on an unprecedented scale.
The most concentrated value chains such as energy and semiconductors are also the most traded by value and most exposed to shocks, protectionism included. Labour-intensive value chains like apparel are more geographically spread out. But weather-related events can destabilise demand as well as supply. There is also risk in country-specific value-addition clusters for sectors like pharma. As market growth moves towards the base of the pyramid, value chains need retooling with ESG fins. B20 takes sustainability to the core of business by seeking inclusion within value chains.
